1. Ethics, Part 2 Chapter 5 pp. 153-169
2017 National Income
Tax Workbook™

2. p. 153 Introduction Cybersecurity Risk of a cyberattack
Cybersecurity breaches
Cost of a cybersecurity breach
Risk management

3. p. 154 Continuing Education
The duty to safeguard client privacy and security is an ethical duty Per the IRS, identity theft and data security programs that focus on enhancing tax professional awareness of protecting client data can also qualify for continuing education credit in the federal tax law category

4. p. 154 Risk of Cyberattack Data breaches increased 40% in 2016
Small businesses at greater risk because less time, money, and expertise to defend against cyberattack
As big businesses become more secure, attackers target small businesses
Attackers specifically targeting tax practices

5. Cybersecurity Breaches pp. 155-157
Hacking
Phishing
Denial-of-Service (DOS)
Malicious Code
Theft or Loss of Device
Employee/Vendor Error

6. p. 155 Hacking Steal info or shut down the system
Exploiting vulnerabilities to gain unauthorized access
Download virus
Unsecure wireless
Unauthorized access to password
Steal info or shut down the system

7. p Example 5.1
Hackers broke into retail credit card system of T.J. Maxx and Marshalls. Intercepted wireless transfers. Stole more than 90,000,000 credit and debit card numbers.

8. p Phishing
that looks legit but designed to steal confidential information
In 2016 IRS saw 400% increase in phishing and malware incidents

9. Example 5.2 p.155 New hire at the bank got a welcome email
Appeared to come from HR
Asked for DOB and SSN
Really from third party trying to get confidential info

10. p. 155 Denial-of-Service Attacks
Sends flood of requests to a web page so that the server crashes
Legit users cannot access the system or the website

11. pp Example 5.3
DoS attackers hit Dyn Data Center and overwhelmed systems with junk data traffic Started on the East Coast and then international Disrupted access to Twitter, Netflix, and PayPal

12. p Malicious Code
Gives the computer incorrect or destructive instructions
Designed to damage, disrupt, steal
Comes from infected drive, spam , hacked webpage

13. p. 156 Example 5.4
Attackers planted malware on Hannaford Bros. servers. Intercepted payment card data. Forwarded up to 4.2M stolen card numbers overseas

14. Other Malware p. 156 Viruses – alter, replicate, and damage
Trojan Horses – loss or theft of data
Ransomware – blocks access to data

15. p Example 5.5
2017 Ransomware attack began in Europe and Asia, then spread. Attackers encrypted files, locking more than 200K computers in over 150 countries. Display screen demanded $300 in Bitcoin to restore the files

16. Spyware and Adware p. 157
Spyware - may display advertising, collect personal information, or change the configuration of a computer
Adware - displays unwanted advertisements (like pop-ups), redirects search requests to advertising websites, and collects marketing data

17. Theft or Loss of Device p. 157
Breach b/c of theft or loss of
Laptops
Smart phones
Tablets
Removable media

18. p. 157 Example 5.6
Veterans Affairs employee was working from home. Laptop and external hard drive stolen. Unencrypted information on 26.5M people, including names, SSNs, and DOBs

19. Employee Errors p. 157 Unknowingly download malware
Use an unsecure computer network
Inadvertently release personal information

20. p. 157 Example 5.7
The Boston Globe accidentally recycled paper containing subscriber financial data and used the recycled paper for routing slips in 9,000 bundles of newspapers – distributed to retailers and newspaper carriers. Info on about 240,000 subscribers disclosed

21. pp. 158-159 Costs of Cybersecurity Breach
Internal Costs to investigate and respond External Costs like lost business and damaged equipment

22. p. 158 Internal Costs of Breach
Detect and deter: IT guy or other security
Investigate: forensic accountant to determine what, if anything, was taken
Containment: shut down unsecure applications and stop an attack
Recovery: back up and restore data
Response: improve system to deter future attack

23. pp. 158-159 External Costs of a Breach
Information loss or theft: attorneys, reporting, identity repair, penalties and fines, lawsuits
Business disruption: downtime
Equipment damage: repair or replace software and systems
Lost revenue: damage to reputation, lost customers

24. pp. 159-161 Risk Management Reduce likelihood of breach IT manager
Employee training and awareness
System security, encryption, passwords
Intrusion prevention and detection system
Separate guest network, etc.

25. pp. 161-162 Risk Management Cont.
Reduce the size of a loss
Response plan
Cybersecurity insurance

26. pp. 162-163 Cybersecurity Insurance
Transfers cost of loss to insurance co.
Look closely at what is covered:
Loss of income
Equipment damage
Attorney, forensic investigator, PR person
Third party claims and defense
Ransom $
Regulatory fines or penalties, etc.

27. p. 163 Coverage Limits and Cost
Coverage limits depend on:
Size and scope of business
Number of customers
Presence on the Internet
Coverage cost depends on:
Number of clients
Loss history
Selected coverage

28. pp Appendix 2
Sample Information Security Plan
Every tax practice should have one

29. Questions?